Revenue Statement December 31, 2019 Sales (net Plus: Income from operations of discontinued Division P (net of $960 income taxes) Less: Dividends declared ($1.50 per common share) Net revenues Less: Selling expenses Gross profit Less: Operating expenses: Interest expense Loss on sale of Division P (net of $1,200 income tax credit) Cost of goods sold Income tax expense on income from continuing operations $ 179,000 2,240 (7,500) $ 173,740 (19,000) $ 154,740 $ 4,100 2,800 110,700 5,370 Total operating expenses (122,970) $ 31,770 Operating income Miscellaneous items: Dividend revenue General and administrative expenses Income before unusual items Unusual items: Loss on sale of land Correction of error in last year's income (net of $1,500 income taxes) Net income $ 1,800 (24,300) (22,500) $9,270 $ (4,800) 3,500 (1,300) $ 7,970 Retained Earnings Statement December 31, 2019 Beginning retained earnings Add: Net income Adjusted retained earnings Less: Loss from theft (net of $2,760 income tax credit) Ending retained earnings $62,850 7,970 $70,820 (6,440) $64,380 Coprige 30 Cimpuge Laming A Righn Roeral. Mag se coglod. samet. er duplicandia sker ia part Due to dedseik sgte tet pary co ay be ngproned trethe ak ndir schupri biialvien hes demel eet omte d mey llet be orenl king npeiener. Cempupe Leenin erves terigemnt al omietny tie sene rig m me Problems 5-69 You determine that the account &alances listed on the statements are correct but are incorrectly classified in certain cases. The company faces a 30% tax rate. No shares of common stock were issued or retired during 2019.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rox Corporation’s multiple-step income statement and retained earnings statement for the year ended December 31, 2019, as developed by its bookkeeper, are shown here:

1. Review both statements and indicate where each incorrectly classified item should be classified.                                                                                           2. Prepare a correct multiple-step income statement for 2019.                           3. Determine the correct beginning balance in retained earnings, and then prepare a correct 2019 retained earnings statement.

Revenue Statement
December 31, 2019
Sales (net
Plus: Income from operations of discontinued Division P (net of $960 income taxes)
Less: Dividends declared ($1.50 per common share)
Net revenues
Less: Selling expenses
Gross profit
Less: Operating expenses:
Interest expense
Loss on sale of Division P (net of $1,200 income tax credit)
Cost of goods sold
Income tax expense on income from continuing operations
$ 179,000
2,240
(7,500)
$ 173,740
(19,000)
$ 154,740
$ 4,100
2,800
110,700
5,370
Total operating expenses
(122,970)
$ 31,770
Operating income
Miscellaneous items:
Dividend revenue
General and administrative expenses
Income before unusual items
Unusual items:
Loss on sale of land
Correction of error in last year's income (net of $1,500 income taxes)
Net income
$ 1,800
(24,300)
(22,500)
$9,270
$ (4,800)
3,500
(1,300)
$ 7,970
Retained Earnings Statement
December 31, 2019
Beginning retained earnings
Add: Net income
Adjusted retained earnings
Less: Loss from theft (net of $2,760 income tax credit)
Ending retained earnings
$62,850
7,970
$70,820
(6,440)
$64,380
Coprige 30 Cimpuge Laming A Righn Roeral. Mag se coglod. samet. er duplicandia sker ia part Due to dedseik sgte tet pary co ay be ngproned trethe ak ndir schupri
biialvien hes demel eet omte d mey llet be orenl king npeiener. Cempupe Leenin erves terigemnt al omietny tie sene rig m me
Problems
5-69
You determine that the account &alances listed on the statements are correct but are incorrectly classified in certain
cases. The company faces a 30% tax rate. No shares of common stock were issued or retired during 2019.
Transcribed Image Text:Revenue Statement December 31, 2019 Sales (net Plus: Income from operations of discontinued Division P (net of $960 income taxes) Less: Dividends declared ($1.50 per common share) Net revenues Less: Selling expenses Gross profit Less: Operating expenses: Interest expense Loss on sale of Division P (net of $1,200 income tax credit) Cost of goods sold Income tax expense on income from continuing operations $ 179,000 2,240 (7,500) $ 173,740 (19,000) $ 154,740 $ 4,100 2,800 110,700 5,370 Total operating expenses (122,970) $ 31,770 Operating income Miscellaneous items: Dividend revenue General and administrative expenses Income before unusual items Unusual items: Loss on sale of land Correction of error in last year's income (net of $1,500 income taxes) Net income $ 1,800 (24,300) (22,500) $9,270 $ (4,800) 3,500 (1,300) $ 7,970 Retained Earnings Statement December 31, 2019 Beginning retained earnings Add: Net income Adjusted retained earnings Less: Loss from theft (net of $2,760 income tax credit) Ending retained earnings $62,850 7,970 $70,820 (6,440) $64,380 Coprige 30 Cimpuge Laming A Righn Roeral. Mag se coglod. samet. er duplicandia sker ia part Due to dedseik sgte tet pary co ay be ngproned trethe ak ndir schupri biialvien hes demel eet omte d mey llet be orenl king npeiener. Cempupe Leenin erves terigemnt al omietny tie sene rig m me Problems 5-69 You determine that the account &alances listed on the statements are correct but are incorrectly classified in certain cases. The company faces a 30% tax rate. No shares of common stock were issued or retired during 2019.
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